FTSE All-Share Index (.FTAS) Market Round-Up

Last week, the benchmark FTSE All-Share Index (.FTAS) traded in a range of ~4015 to ~4071 and settled at 4042.42 with a marginal gain of ~0.65 percent for the week ending June 04, 2021. The recent week also started on a slightly positive note and prices are hovering around the resistance turned support level 4000 since the past eight weeks, indicating the possibility of an upward direction. However, on the weekly chart, prices are forming a rising wedge formation and currently facing resistance from an upper band of the pattern. The leading indicator RSI (14-period) is trading at ~65.63 levels and seems supportive of a positive movement. Prices are well placed above trend-following indicators 21-period and 50-period SMA, further providing strength to the index.

The improved Service PMI and Construction PMI data released by IHS Markit helped the index to retain at higher levels. As per the data, the IHS Markit / CIPS UK Services PMI® reached 62.9 in May 2021 and witnessed the fastest rate of service sector output growth for 24 years, while IHS Markit / CIPS UK Construction PMI® reached 64.2 in May 2021 and increased at the fastest rate since the survey began in April 1997.

Global Markets Wrap-Up

Last week, Wall Street continued an upside direction and the two benchmark indices ended in green. S&P 500 settled at 4229.89 with a gain of ~0.61 percent, while NASDAQ Composite Index settled at 13814.49 with a gain of ~0.48 percent for the week ending June 04, 2021. As per the data released by the US Bureau of Labor Statistics, the US weekly unemployment claims declined further to 385,000 from 405,000 in the prior week and supported the market sentiments.

Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of the FTSE All-Share Index (.FTAS) for the upcoming week, now let us have a look at the two FTSE listed stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Mediclinic International PLC (LON: MDC) and Superdry PLC (LON: SDRY) for the next 2-4 weeks duration:

Mediclinic International PLC 

Mediclinic International PLC (LON: MDC) is a UK-based international healthcare service provider. The company business segment includes private hospital chains and has operations in countries like South Africa, Namibia, Switzerland, and UAE.Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

MDC's prices recently broke a downward sloping trend line by an upside and trading above the breakout level, indicating an upward direction. Prices also broke a major resistance level of GBX 343 on May 26, 2021 with the rise in the volumes, thereby higher market participation supporting an upside movement. For the short-term (2-4 weeks), we may expect a positive direction in the stock and prices may test the next major resistance level of GBX 399. A further breakout above GBX 399 backed by volumes may extend buying in the stock till GBX 420 level. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~64.97 levels and indicating a positive trend for the stock. The weekly volumes showing an increasing trend and seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Mediclinic International PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Mediclinic International PLC is looking technically well-placed on the chart, and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Superdry PLC

Superdry PLC (LON: SDRY) is a popular clothing brand. The company produce, design, and sell clothing and accessories under the name of Superdry brand. The company sells its products through its 672 stores worldwide as well as online. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

SDRY's prices took the support of an upper band of an ascending channel pattern and started to move upside, indicating an upward direction for the stock. The recent upside movement is backed by volumes and further supporting a positive stance. Now the next major resistance level appears at GBX 493, and prices may test that level in the short-term (2-4 weeks).  

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~64.45 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for Superdry PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Superdry PLC is looking technically well-placed on the chart, we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the FTSE All-Share Index and listed stocks’ prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

Note: The reference date for all price data, volumes, technical indicators, support, and resistance levels is June 07, 2021. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

GBP: British pound sterling

GBX: British pence sterling

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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